Money Market Instruments Quiz

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Questions and Answers

In the scenario provided, who is considered a supplier of funds?

  • Rose (correct)
  • Jack
  • Both Rose and Jack
  • None of the above

What is the role of a financial market in the scenario?

  • To increase debt levels
  • To discourage investments
  • To provide a platform for buyers and sellers to meet (correct)
  • To reduce profitability

What is a private placement in the context of the scenario?

  • A public event hosted by financial institutions
  • A meeting between suppliers and users of funds in the financial market
  • A government-regulated investment opportunity
  • An exclusive arrangement between Rose and Jack (correct)

What is the purpose of treasury bills, commercial papers, and certificate of deposit in the financial markets?

<p>To offer relatively safe, interest-bearing assets for idle funds (B)</p> Signup and view all the answers

Which term best describes a marketplace where equities, bonds, currency, and other financial securities are traded?

<p>Financial market (B)</p> Signup and view all the answers

How do bonds differ from stocks in the financial markets?

<p>Companies use bonds to finance projects, while stocks are used for temporary financing. (D)</p> Signup and view all the answers

What do financial institutions do in the scenario?

<p>Match suppliers of funds with users of funds (D)</p> Signup and view all the answers

What role do investors play in the stock market?

<p>Buying and selling ownership shares (D)</p> Signup and view all the answers

What motivates Rose to lend money to Jack in the scenario?

<p>Jack's profitable business operations (D)</p> Signup and view all the answers

Where are securities with longer-term maturities typically sold?

<p>Capital markets (C)</p> Signup and view all the answers

Why do companies and governments use bonds as a form of financing?

<p>To finance various projects and activities over defined periods (A)</p> Signup and view all the answers

What is the primary function of the stock market for investors?

<p>Enabling buying and selling of ownership shares (C)</p> Signup and view all the answers

What is the primary function of the financial system?

<p>To distribute funds from investors to users of funds (D)</p> Signup and view all the answers

In the context of the text, who would be classified as a 'user of funds'?

<p>Jack, the entrepreneur (B)</p> Signup and view all the answers

How does the financial system facilitate the process between savers and users of funds?

<p>By allowing savers to lend directly to users (B)</p> Signup and view all the answers

Where would an entrepreneur like Jack go to obtain additional funding for expanding his business?

<p>Stock market (A)</p> Signup and view all the answers

Which financial market deals with securities with maturities of one year or less?

<p>Money market (D)</p> Signup and view all the answers

In financial terms, what role would Rose play if she invested her idle cash in financing activities?

<p>Saver of funds (B)</p> Signup and view all the answers

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